Starting from zero: how to begin saving and investing without family help

Not everyone has the help of parents or family when they start out trying to build and save for the long term. Here are some ideas for how to get going.

Starting from zero is the reality for millions of young people embarking on adulthood. For many, building financial security is made easier by a safety net of parental support: money for a first car, help with university costs, a deposit on a flat, or even just the reassurance that someone could step in during an emergency. 

But what if you do not have that support? Starting from zero can feel daunting, especially when you know that a mistake or unexpected bill could derail your plans. 

The good news is that it is still possible to build stability and wealth over time. Careful planning, use of incentives and steady habits can help establish a safety net and begin to invest for the future.

Build stability before you invest

Before you put money into the stock market or think about property, it is worth creating a financial safety net when you start from zero.

The first step is to understand your income and outgoings. A simple budget is enough.

Track what comes in and what you spend each month. Banking apps such as Monzo and Starling can categorise your spending automatically, while tools like Emma or Plum can give you a clearer picture if you have multiple accounts.

It is also critical at this juncture to ensure that if you have unsecured debts such as credit cards then prioritising paying these off is the first thing you should do. This is because the high interest rates on such products are very difficult to overcome if you’re just making the minimum repayments. 

Beyond that, once you know where your money is going, aim to build an emergency fund. This is a pot of cash that you keep separate and easy to access in case of an unexpected expense such as car repairs, medical bills or job loss. 

Without parents to turn to, this buffer is crucial. A common target is three to six months of essential expenses, but even £500 or £1,000 is a good first step. It will help in an emergency and prevent the need for other tools such as debt – which can become a difficult spiral to get out of. 

Look for easy access savings accounts that pay competitive interest. comparison sites such as Moneyfactscompare.co.uk can help you find the best rates.

Make the most of schemes

The UK Government provides a variety of schemes designed to help people with low or moderate incomes build savings. These can be especially valuable if you are starting with little and have no external support.

Help to Save

One of the most generous is the Help to Save scheme. It is available for people on Universal Credit. 

You can save up to £50 a month over four years. At the end of the second and fourth years, the government adds a 50% bonus based on the highest balance you have achieved. 

That means you could save £2,400 over four years and receive up to £1,200 in bonuses. It is effectively free money for those who qualify and the scheme is flexible: you do not have to pay in every month and you can withdraw if you need to, though that may affect the bonus.

The Help to Save scheme has paid out over £500 million in bonuses already. It was extended to those in work in 2023 because of the effectiveness of the scheme in helping those on low incomes save up a safety net over time. 

Regular savers

For those who can’t access Help to Save, it is worth shopping around for ‘regular saver’ accounts which pay high levels of interest over 12 months. These aren’t schemes per se, but are a useful way to build up savings when starting from zero.

While the interest isn’t as generous as 50%, the rates are much better than typical easy access accounts and will give your cash savings a decent boost over a year. 

Zopa currently pays 7.1% on its regular saver while first direct’s is 7%. These accounts do however come with some restrictions – namely that the bonus rate ends after 12 months typically – so you’ll need to move your savings elsewhere once that bonus period is up. 

There is also typically a limit to how much you can save in the first year. Zopa for instance has a maximum of £3,600. 

Lifetime ISAs

Looking beyond the very short term if you want to build a house deposit and get off the rental merry-go-round, a helpful tool is the Lifetime ISA or LISA. but many are starting from zero when it comes to a deposit too.

You can open a LISA if you are aged 18 to 39. Each tax year you can pay in up to £4,000, and the government adds a 25% bonus on your contributions. That is up to £1,000 free each year. 

You can use the money either to buy your first home or keep it invested until you are 60, at which point withdrawals are tax-free. 

Be aware that if you take money out for another reason, you pay a 25% withdrawal charge, which effectively means losing the bonus and a little of your own cash too. But for first-time buyers or long-term savers, a LISA is one of the best deals available.

Pensions

And finally, although you can’t access pensions until you reach pension freedom age (currently 57) if you are employed, workplace pensions are perhaps the core to long-term wealth growth when you’re starting from zero. 

Under auto-enrolment rules, most employers must put you into a pension and contribute alongside what you pay in. The Government gives tax relief on your contributions, meaning some of the money you would have paid in tax goes into your pension instead. 

Turning down this benefit is like refusing free money, something you should not do when starting from zero. If you can afford to, consider increasing your contributions over time, particularly when you get a pay rise.

A point to consider with pensions is most are invested in what are called ‘default funds’. These are invested in the stock market and often into bonds too. While they are handy for people who don’t want to pick investments themselves, they do tend to be more conservative. 

Anyone who is younger might want to consider taking on more risk in order to maximise the opportunity for pension growth, so it is important to research and understand your default fund and potential alternatives. 

Learn the basics of investing

With that in mind, once you have an emergency fund and are taking advantage of the above, it is worth learning how investing works. 

Over the long term, investing in a diversified portfolio of assets has historically beaten keeping money in cash, which loses its value to the effects of inflation. Investing can seem intimidating, but you do not need to pick individual stocks or gamble on market timing.

A straightforward way of starting from zero, beyond your pension, is through a stocks and shares ISA. This is a tax-free wrapper: any gains or dividends you earn inside it are not taxed. 

Within the ISA, you can buy low-cost index funds or exchange-traded funds (ETFs) that track the performance of large groups of companies, such as the FTSE 100 or global markets. These funds spread your risk across many companies and keep costs relatively low.

It is important to understand risk with investing. Investments can go down as well as up, especially in the short term. But if you have a long horizon and keep adding regularly, it is possible to smooth out market ups and downs. 

Starting early and staying invested gives your money time to compound, which is when your gains start to generate their own gains.

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Keep costs low and avoid common traps

One of the biggest factors in long-term investing success is cost. High management fees can eat away at returns. 

That is why many experts recommend low-cost index funds rather than actively managed funds that charge more but often fail to beat the market after fees.

Be cautious of day trading, cryptocurrency speculation and get-rich-quick schemes. These can be highly risky, and without a financial cushion you are especially vulnerable to losses. 

Social media is full of “finfluencers” promising easy wealth, but many of them profit from clicks, not your financial wellbeing. If an opportunity sounds too good to be true, it probably is.

Build habits that make saving and investing automatic

Discipline is easier when you do not have to rely on willpower. Set up a standing order or direct debit to move money into savings or investments the day after payday. This way you pay yourself first and avoid spending what you intended to save.

Whenever your income rises, try to increase the amount you save rather than letting your spending grow to match. Even small, regular increases can make a big difference over time. Check your progress periodically but avoid obsessively watching market movements, which can tempt you to panic when prices fall.

Think of wealth building as a long journey. You do not have to do everything perfectly. What matters most is starting and staying consistent.

Starting with no safety net is harder, but not hopeless. Building an emergency fund gives you control when life throws challenges your way. 

Taking advantage of Government schemes like Help to Save, Lifetime ISAs and workplace pensions can stretch every pound you save. Learning the basics of investing early helps your money work harder over time.

The journey may feel slow at first, but small, steady actions compound into real growth. By automating good habits, keeping costs low and continuing to learn, you can create the financial stability that others might inherit. The playing field is not perfectly level, but it is far from impossible to succeed.

If your finances become more complex or you feel unsure, a regulated independent financial adviser can provide tailored advice. Look for someone listed on the Financial Conduct Authority register and ask about fees up front.

DISCLAIMER

This article is produced for general informational purposes only.

It should not be construed as investment, legal, tax, mortgage or other forms of financial advice.

If in any doubt about the themes expressed, consider consulting with a regulated financial professional for your own personal situation.

Past performance is no guarantee of future results.

Investments can go down as well as up and you may get back less than you started with.

Investments are speculative and can be affected by volatility.

Never invest more than you can afford to lose.

For more information visit ⁠⁠⁠www.fca.org.uk/investsmart⁠